Bloomberg News

TPG, Silver Lake May Have Sabre IPO in a Few Years, CEO Says

November 04, 2011

(Updates with American response in 12th paragraph.)

Nov. 3 (Bloomberg) -- Sabre Holdings Corp., the largest provider of technology to the travel industry, may become a publicly traded company again in the “next couple of years,” Chief Executive Officer Sam Gilliland said.

Sabre, owned by private-equity firms TPG Capital and Silver Lake Management LLC, isn’t a candidate for a stock sale now because of the weak market for initial public offerings, Gilliland said yesterday in an interview at the company’s headquarters in Southlake, Texas.

“It’s very likely we’ll eventually exit from being a private company,” he said. “I’d be surprised if we’re not back out in the next couple of years. We don’t have folks itching to get us back out now.”

The company was spun off by American Airlines parent AMR Corp. in March 2000 and was publicly traded until its purchase in 2007 by TPG and Silver Lake. Being closely held allows Sabre to invest in technology with a long-term outlook rather than focus on quarterly results for investors, Gilliland said.

Gilliland was named CEO in 2003, and was running Sabre when it agreed in December 2006 to a buyout by TPG and Silver Lake for about $4.4 billion. Spokesmen for TPG and Silver Lake declined to comment today about a Sabre IPO.

Travelocity Parent

Sabre owns a so-called global distribution system, sharing data from travel providers such as airlines with travel agents, and website Travelocity.com. More than 350,000 agencies worldwide access Sabre data daily, and it processes 45,000 transactions every second, the company said.

Bond investors are growing more concerned about creditworthiness at Sabre, which has been sued by American and US Airways Group Inc. in disputes about access to travel data and asked to provide information for a U.S. Justice Department antitrust probe in the GDS industry.

The cost of five-year credit-default swaps on Sabre debt increased to 20.6 percent upfront today, up from 14.9 percent on Aug. 30, according to data provider CMA. That means it would cost $2.06 million initially and $500,000 annually to insure $10 million of Sabre’s debt against losses.

Lawsuits filed against Sabre by American are an effort “to use the legal system as a tool to negotiate commercial agreements,” Gilliland said. American sued Sabre in state and federal courts, claiming its unit that distributes flight and fare data to travel agents operates a monopoly.

‘More Productive’

“We think there are more productive and less expensive ways to negotiate commercial agreements,” Gilliland said, declining to comment further.

A June 13 trial date has been set in the state court case. The suits are at the heart of a dispute between global distribution systems like Sabre and U.S. airlines that want greater control over how their data is distributed.

“We have not yet been contacted by Sabre to restart negotiations,” said Ryan Mikolasik, a spokesman for American at public-relations firm Weber Shandwick. “We are prepared to begin working through the significant gaps between the parties whenever Sabre is ready to negotiate.”

US Airways also filed an antitrust suit against Sabre, and the U.S. Justice Department in May began investigating possible antitrust violations in the GDS system industry. Travelport Ltd., a Sabre competitor, was asked to submit information, as were American, US Airways and Delta Air Lines Inc.

Sabre also owns units that provide software and technology to help 380 airlines with functions including flight and crew scheduling, and assist more than 12,000 hotels with marketing and operations.

--With assistance from Zeke Faux in New York. Editors: Ed Dufner, John Lear

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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